Dive Brief:
- The Securities and Exchange Commission plans to vote on its proposed climate disclosure rule next week, an SEC spokesperson told ESG Dive over email. The vote will take place during an open commission meeting on March 6 — almost two years after the agency released its initial proposal.
- The SEC posted a Sunshine Act Notice — which agencies are required to provide in advance of certain meetings that are open to the public — on its website Wednesday, confirming its plans to “consider whether to adopt rules to require registrants to provide certain climate-related information in their registration statements and annual reports.”
- The announcement comes just a few days after Reuters reported the SEC had dropped a requirement for companies listed in the United States to report their scope 3 greenhouse gas emissions as part of their climate related disclosures. The SEC initially said it expected to finalize the climate rule in April.
Dive Insight:
An SEC spokesperson previously told ESG Dive the agency “moves to adopt rules only when the staff and the Commission think they are ready to be considered,” neither confirming nor denying the alleged omission of scope 3 reporting. However, the spokesperson added the agency “benefits from robust engagement from the public on rulemaking proposals” and, based on this public feedback, considers “possible adjustments to the proposals and whether it’s appropriate to move forward to a final adoption.”
The regulatory agency received over 16,000 comments since unveiling its initial proposal to require U.S.-listed companies to disclose climate risks, causing it to repeatedly postpone a final rule as it reviewed those comments.
The common denominator driving most of these complaints was a requirement for companies to disclose their scope 3 emissions — emissions that are not directly produced by the company itself or assets owned or controlled by the company, but by entities that are part of the company’s value or supply chain, according to the Environmental Protection Agency. For food companies, scope 3 emissions would include the environmental impact of their farm suppliers.
The SEC announced the climate rule's expected release date in December, after missing an October release, though it shared no further insight into what the ultimate version of this rule would entail. With the backlash and delays piling up, many experts and corporations have expressed doubts about scope 3 making the final cut in the rule prior to the recent reports.
The omission of scope 3 could complicate compliance for companies that will still need to disclose these emissions under the European Union’s Corporate Sustainability Reporting Directive and California’s own disclosure laws. The CSRD’s scope 3 reporting requirements, which require companies to take a double materiality approach, are far more extensive, and California’s SB 253 also mandates scope 3 reporting.
Next week’s commission meeting will also deliberate over adopting amendments to the national market system stock order execution disclosure requirements of Regulation NMS under the Securities Exchange Act of 1934. The updated rules are designed to “modernize and strengthen the regulatory structure of the U.S. equity markets,” according to the SEC.
